The New Yorker Summit: Jeffrey Sachs and Esther Duflo on Poverty

Esther Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at M.I.T., and Jeffrey Sachs, a Columbia economics professor and U.N. adviser, speak with The New Yorker’s executive editor, Dorothy Wickenden, on using economics to solve poverty.

Sachs, who wrote a book titled “The End of Poverty,” notes that American society doesn’t care about poor people in other countries.

Duflo, who has said the “dismal science” of economics should be more of a human science, laments that the World Bank, the I.M.F., and developing countries go from “fad to fad,” focussing on schools, then microcredit, etc.—like the New York fashion scene.

The new trend, Wickenden notes, involves bribing parents to send their kids to school, to ramp up the incentives. But Duflo says that that misses the point: It’s more cost effective to tell parents what benefits school incurs. It’s also more cost effective to spend money on making sure parents and kids get treated for intestinal worms so they aren’t bedbound.

Sachs points out that focussing on cost-effectiveness neglects the problem of neglect; $4 trillion went to the banks, but nothing went to fighting poverty. Obama may claim that Congress is tying his hands, Sachs says, but he needs to show leadership. “There needs to be a public discussion,” he said, adding that the only mention of foreign aid in the campaign came during a debate when the Obama campaign said they might not be able to afford doubling the (already miniscule) budget for foreign aid.

“There’s a level of phoniness that is so big in all of this,” Sachs says, when Wickenden references Rwandan President Paul Kagame’s protestations that he’s dependent on aid.

The conversation then turns to Bono, and complaints that he’s “neo-colonialist.” Both Duflo and Sachs vigorously reject this, and point out how many children are dying of malaria or other preventable diseases. “The whole notion that we should not interfere with the process of the market” because it will keep the nation from realizing its own genius, is bunk, Duflo says. “We need to focus on what works.”

Wickenden then asks Duflo to talk about her on-the-ground work in India and Kenya. Duflo says that in Indian villages women are really keen on getting drinking water—where women run the villages, the drinking water is better. When men are surveyed, they aren’t happy with the women; but after a cycle of being exposed to women politicians, their biases fade away.

Sachs is then asked about managing the need for industrial growth with environmental sustainability. He admits that its tough and we need technology. He says that we can’t leave everything to the market, and that there’s no simple problem. “We abandoned all collective actions: we abandoned all development aid, we abandoned the environment, we left everything to Wall Street,” he says. Sachs thinks Obama has the right intentions, but some of his economic team does not. He then criticizes U.S. policy in Pakistan, which focuses on the military and not development. (Some may argue that the aid went to the wrong parts of the military, focussing on weapons that are useful against a cold war with India, not useful when dealing with a Taliban insurgency.) “We really, really need change, you know. That’s why we elected President Obama.”

Duflo ends on a slightly less politically charged note, noting that some problems don’t have solutions where the incentives are properly aligned for markets to work. Some collective action is needed. “What we have learned from the work we’ve done in developing countries is that it doesn’t take that much to improve the lives of many people.